Foreign language effect in accounting uncertainty expressions: Interpretation and probabilistic estimation

Abstract

The foreign language effect, or thinking in a foreign language, reduces judgment bias under uncertainty. This study investigates how language use (native versus foreign) affects accounting judgment on uncertainty expressions. We conducted two separate experiments: between-subjects and within-subjects, both of which included tasks requiring interpretations and probability estimations based on accounting standard uncertainty expressions. The results demonstrated that foreign language use affected the interpretation of uncertainty expressions and reduced judgment bias in probability estimation, particularly in the context of asset recognition. These findings have important implications for accounting research and reporting.